Liberty Global LBTYA reported strong third-quarter results that were in line with our expectations. We are maintaining our fair value estimate. Foreign exchange movements were much more favorable to Liberty Global in the third quarter, allowing the firm to report 7% year-over-year revenue growth. Growth continues to mainly come from Belgium, Japan, and Australia. However, we expect other European operations to pick up as the firm rolls out the faster DOCSIS 3.0 cable broadband in more geographic areas. We expect these significantly higher speeds to entice new subscribers to sign up for Liberty's broadband service, which should lead to higher average revenue per user and revenue. The firm continues to refinance its debt, pushing maturities further into the future, and it has bought back another $200 million worth of its stock. Despite the continued income statement losses, Liberty Global is generating significant free cash flow. This allowed the firm's net debt/earnings before interest, taxes, depreciation, and amortization level to drop to 3.8 times despite the buybacks. With the continued debt extensions, short-term credit risk has been significantly reduced, but the firm remains highly leveraged. However, if markets continue to improve, Liberty is a leveraged play on cable television stocks with significant upside.
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Analyst Notes
11-13-09 | 10:38AM Liberty Global to Buy Unitymedia
08-07-09 | 5:29PM Liberty Global Reports 2Q Results
05-19-09 | 3:07PM Liberty Global Reports 1Q Results
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